by Zoe Brett
A few years' ago I ran my first Financial Planning Week. For those that don't know, Financial Planning Week is a full week of free resources, raising awareness and pro bono work to anyone that wants it.
I was so excited to give something back to the community. I had long been bothered that not everyone has access to good financial planning and I promptly nominated my then firm for providing pro bono work. The appointments flooded in. It was a roaring success. But when we met with the respondents they were not who I expected. I thought we would be helping low income families, graduates, and people within the benefits system. But the bulk of the individuals we met were high earners who wanted to start building their assets.
Remembering this story got me thinking about HENRYs (High Earners Not Rich Yet). HENRYs are typically in their 20's and 30's. They earn upwards of £100,000 annual income but have yet to accrue much in the way of capital wealth. They know they need advice but unless they have the benefit of utilising the family financial planner they are often deemed uncommercial. I can only imagine how frustrating it must be for them in trying to source quality financial planning before having accrued meaningful assets. Robo-advice has done an excellent job of meeting much of the demand, but are we as financial planners missing opportunities from would-be clients simply because we are not seeing their value?
In a world of transparency, clients are savvier now more than ever. They understand that financial planning isn't just running the numbers, it's asking the right question at the right time. It's thinking decades ahead how one action will impact another and coaching our clients to not to be their own worst enemy. HENRYs are in as much need of financial planning as anyone, if not more. And they are hungry for it.
The US caught this trend ahead of us Brits, but the last few years we have started to see a much needed shift in our financial planning landscape. Many firms have adapted their proposition to accommodate HENRYs and are reaping the rewards. But as an industry we still have catching up to do. It's definitely a challenge, but isn't that what keeps life interesting?
A HENRY's planning needs are likely to be relatively simple. They will likely require tapered annual allowance calculations, basic tax planning strategies and some starter goals. This will probably turn into an annual meeting requirement, but I have come across plenty of HENRYs that, for now at least, simply want to be put on the right track and left to it. It is therefore important to price a HENRY's proposition appropriately for both holistic financial planning and transactional.
I know, that word transactional invokes shudders, but I find offering this to be better than no help at all. In considering the propositions out there, £1,500 seems to be a respectable fee for getting a plan in place and an ongoing fee of £950 per annum for annual tax strategies, simple progress updates and planning tweaks. Then once enough AUM has accrued and the planning requirements become more complex they can be switched to a standard financial planning proposition.
For time strapped young professionals the flexibility of having video meetings is a must. They have grown up on various forms of face time technology and many will not want to waste time traveling if they don't need to. Equally, to keep things cost effective for you you're not going to want to travel either.
Tech will play a big role in any proposition aimed at young professionals, not only for a generation that grew up on technology but also to keep costs down. Up to date information needs to be readily available and accessible with the use of apps or portals that cut through the noise and get straight to the point. The hard work here has been done for you. Many providers have their own apps. If not, there are options out there that you can white label for your own business.
Younger generations seem more enthused about ethical considerations these days, perhaps because there is now so much more information and choice available. They not only want to ensure they are ethically investing but see that it is actually having a positive impact on the world by funding innovative companies.
Client events need to be time well spent for these go getters. They need to be deeply targeted and add value on multiple levels. Events such as those that focus on teaching business development for entrepreneurs go down well, idealy ones that provide networking with people tailored to your client's particular businesses. A little personalisation and thought goes a long way for these driven individuals.
Sounds like a lot doesn't it? But the thing to remember here is that in our world of technology and specialist outsourcing the above proposition is already out there. All you need to do is package it up and start building your next generation of clients.
Zoe has worked in the financial services industry since 2002. She is a true believer in financial planning and thoroughly enjoys her work as a Senior Technical Consultant at EQ Investors. She believes her role in this industry is not always easy but it has purpose. She feels privileged to be in a position that helps clients build more fulfilling lives.
